Global value chains and the dynamics of UK inflation (with Tommaso Aquilante, Aydan Dogan and Melih Firat)
This paper explores the link between the UK's participation in global value chains (GVCs) and inflation dynamics. Using a two-country model with input-output linkages, we demonstrate analytically that an increased reliance on imported intermediate goods, serving as a GVC proxy, results in a flatter Phillips curve. Empirically, we find evidence indicating that UK industries with higher proportions of intermediate imports from Emerging Market Economies (EMEs) exhibit a flatter Phillips curve. This observation stems not only from GVC integration's impact on the slope but also from the influence of medium-term forces that shape firms' marginal costs via international relative price fluctuations. Specifically, we highlight how the limited business cycle correlation between the UK economy and EMEs leads to a diminished pass-through effect of domestic shocks on prices.
Work in progress
The macroeconomics of international remittance flows (with M. Ludovica Ambrosino)
This paper studies the drivers of international remittance flows and their implications for international risk-sharing. In the last 20 years, international remittance flows have become an increasingly important component of capital flows to low-and-middle-income countries and in recent years, have overtaken FDI. We design a survey to understand the reasons behind migrants’ remittance flows and how remittance senders would behave in a series of hypothetical situations. Preliminary results suggest that the majority of international remittances are sent for the purpose of family support and remittance senders increase their transfers when family members abroad face a negative income shock. Using the results from the survey, we develop a two-country model featuring endogenous remittance flows in general equilibrium and use the model to quantify their role in international risk-sharing.